Test Bank For Principles of Microeconomics Robert Frank 7th Edition

Test Bank For Principles of Microeconomics Robert Frank 7th Edition

Test Bank For Principles of Microeconomics Robert Frank 7th Edition

Principles of Microeconomics, 7e (Frank)

Chapter 5   Demand

1) In most markets, scarce goods or services are rationed among competing users using:

A) non-monetary prices.

B) monetary prices.

C) government organizations.

D) private organizations.

Answer:  B

Explanation:  In most markets, products are rationed among competing users using monetary prices.

Difficulty: 1 Easy

Topic:  The Law of Demand

Learning Objective:  05-01 Relate the law of demand to the Cost-Benefit Principle.

Bloom’s:  Remember

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

2) In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care:

A) is not a scarce resource.

B) is available at zero opportunity cost.

C) is rationed by some non-monetary method.

D) does not exhibit diminishing marginal returns.

Answer:  C

Explanation:  Medical care cannot be produced at zero cost, so if no price is charged for medical care, it must be rationed using some non-monetary method. However, in most markets, products are rationed among competing users using monetary prices.

Difficulty: 2 Medium

Topic:  The Law of Demand

Learning Objective:  05-01 Relate the law of demand to the Cost-Benefit Principle.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

3) Joe is shopping for a new computer. A computer can be delivered to Joe’s home for $1,200. Alternatively, Joe can pick up the same computer at the warehouse for $1,000. How should Joe buy the computer?

A) Joe should drive to the warehouse because $1,000 is less than $1,200.

B) Joe should drive to the warehouse if his cost of driving to the warehouse is less than $200.

C) Joe should drive to the warehouse if his cost of driving to the warehouse is greater than $200.

D) Joe should drive to the warehouse because the $200 he would save by driving to the warehouse is more than 10% of the purchase price.

Answer:  B

Explanation:  Joe should drive to the warehouse if the cost of doing so is less than the added $200 cost of having it delivered.

Difficulty: 3 Hard

Topic:  The Law of Demand

Learning Objective:  05-01 Relate the law of demand to the Cost-Benefit Principle.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

4) The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

A) law of supply.

B) law of increasing cost.

C) Low-Hanging Fruit Principle.

D) law of demand.

Answer:  D

Explanation:  The negative relationship between price and quantity demanded is implied by the law of demand.

Difficulty: 1 Easy

Topic:  The Law of Demand

Learning Objective:  05-01 Relate the law of demand to the Cost-Benefit Principle.

Bloom’s:  Remember

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

5) The law of demand indicates that as the cost of an activity:

A) falls, less of the activity will occur.

B) rises, more of the activity will occur.

C) rises, the level of the activity may or may not increase depending on the individual.

D) rises, less of the activity will occur.

Answer:  D

Explanation:  The law of demand states that people do less of what they want to do as the cost of doing it rises.

Difficulty: 1 Easy

Topic:  The Law of Demand

Learning Objective:  05-01 Relate the law of demand to the Cost-Benefit Principle.

Bloom’s:  Remember

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

Related Test Bank